The daily business briefing: February 8, 2018
Tesla losses spike due to Model 3 mass-production glitches, Twitter reports its first profitable quarter, and more
Tesla losses soar due to Model 3 mass-production problems
Tesla on Wednesday reported that its losses tripled in the last quarter to $771 million as it spent heavily to address problems with ramping up manufacturing of its first mass-production electric car, the Model 3 sedan. "We were in a deeper level of hell than we expected," said Tesla founder and CEO Elon Musk. Tesla also reported a revenue increase of 44 percent, to $3.3 billion, on rising sales of luxury vehicles and SUVs, but analysts said the key is resolving the Model 3 glitches. Tesla has taken $1,000 deposits from about 400,000 customers, and if it can start cranking out enough Model 3s to meet demand, sales and revenue could rise enough to lift it to profitability.
Twitter reports its first profitable quarter
Twitter on Thursday reported its first quarterly net profit — $91 million — after it slashed expenses and its revenue beat analysts' expectations. The microblogging company's inability to start making money had confounded Wall Street, given its broad reach and popularity among celebrities and power brokers, including President Trump. The company said it also expected to show profit, using generally accepted accounting principles, for the full year in 2018. Still, Twitter's user growth missed expectations, falling flat for the quarter at 330 million monthly active users, although that marked a 4 percent increase from a year earlier. A change to Apple's Safari web browser cost Twitter about 2 million active users. The company also stepped up efforts to reduce spam and automated or fake accounts. Twitter shares shot up by 20 percent after the report.
Stocks remain volatile as uncertainty continues
U.S. stocks ended lower on Wednesday after seesawing between big gains and minor losses in another volatile trading day. The Dow Jones Industrial Average fell by 19 points or 0.08 percent after swinging over a 500-point range. The S&P 500 fell by 0.5 percent and the Nasdaq Composite dropped by 0.9 percent. The major U.S. indexes are about 5 percent below January's record highs after massive losses on Friday and Monday, which were softened by a jump on Tuesday. Many analysts said the recent declines were to be expected after months of big gains, as well as a threat of rising inflation. "Market valuations are expensive and need to correct," said Jack Ablin, chief investment officer at Cresset Wealth Advisors. U.S. stock futures wavered early Thursday, edging up then down as global markets struggled.
California leaders aim to block oil from offshore drilling expansion
California officials said Wednesday they will block the transport of petroleum from new offshore oil rigs through the state to thwart the Trump administration's expansion of drilling in U.S. waters. "I am resolved that not a single drop from Trump's new oil plan ever makes landfall in California," said Lt. Governor Gavin Newsom, chair of the State Lands Commission and a Democratic candidate for governor. The California move is the latest attempt by coastal states to block the proposed expansion. Officials in Florida, North and South Carolina, Delaware, and Washington also have protested, saying drilling could cost them a fortune in tourism income by polluting beaches and harming wildlife.
Tronc agrees to sell L.A. Times to billionaire investor
Chicago-based media company Tronc has agreed to sell the Los Angeles Times and The San Diego Union-Tribune for $500 million to billionaire physician and Tronc investor Patrick Soon-Shiong. A Californian, Soon-Shiong takes over during a turbulent period at the Times, "which has seen three editors in six months, its publisher placed on unpaid leave amid a sexual harassment investigation, and a historic vote to unionize the newsroom," the Times reported. With the purchase, Soon-Shiong will succeed Tronc head Michael Ferro, whose tenure was deeply unpopular among the newspaper staff. "It's hard to imagine the new boss being worse than the Tronc era has been," wrote CNN's media critic Brian Lowry, formerly a staffer of the Los Angeles Times.